Keepin' It Real 

Economics, Housing, & Commercial Real Estate Analysis

Apartment REITs
Data Center REITs
Mall REITs
Net Lease REITs
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Single Family Rental REITs
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  • Alex Pettee, CFA

Mall Bankruptcy | REITs Slump | Mortgage Apps Jump

Daily Recap

  • U.S. equity markets finished lower Wednesday, retreating from intra-day record highs after the release of Fed minutes showed resistance to some more aggressive easing actions including yield curve controls.

  • Following gains of 0.2% yesterday, the S&P 500 finished lower by 0.4% today while the Dow Jones Industrial Average dipped for the third straight day.

  • After retreating by 0.5% yesterday, Equity REIT ETFs finished lower by 1.8% today with 14 of 18 property sectors finishing in negative territory. Mortgage REITs, however, gained 0.1%.

  • Troubled mall REIT CBL & Associates is planning to file for bankruptcy by October 1st, saying in a statement today that it had reached an agreement with some of its creditors to hand over control of the company to bondholders.

  • The red-hot housing market is showing no signs of cooling. The Mortgage Bankers Association today reported that mortgage applications to purchase a home increased again last week and are now higher by 27% from last year.

U.S. equity markets finished lower Wednesday, retreating from intra-day record highs after the release of Fed minutes showed resistance to some more aggressive easing actions including yield curve controls. Following gains of 0.2% yesterday, the S&P 500 ETF (SPY) finished lower by 0.4% today while the Dow Jones Industrial Average (DJI) dipped for the third straight day and the Nasdaq 100 (QQQ) finished lower by 0.7%. After retreating by 0.5% yesterday, the Equity REIT ETF (VNQ) finished lower by 1.8% today with 14 of 18 property sectors finishing in negative territory. The Mortgage REIT ETF (REM), meanwhile, gained 0.1% after yesterday's 0.8% decline.

Today's declines come after yesterday's all-time record highs on the S&P 500, which completed a historic and improbable rebound that saw the major indexes plunge more than 30% from late February through late March before rallying more than 50% over the subsequent four months. Better-than-expected economic data - particularly in the critical U.S. housing market - and solid corporate earnings results have been the catalyst behind the recent leg higher, but with equity markets now trading at extended EPS valuations, investors are again growing more cautious in deploying incremental capital. All 11 GICS equity sectors finished in negative territory on the day with the Commerical Real Estate (XLRE), Energy (XLE), and Consumer Staples (XLP) dragging on the downside. 

The red-hot housing market is showing no signs of cooling. The Mortgage Bankers Association today reported that mortgage applications to purchase a home increased again last week and are now higher by 27% from last year. Homebuilders and the broader Hoya Capital Housing Index have been among the hottest equity market sectors over the last quarter as the housing market continues to lead the early stages of the post-pandemic economic recovery. The wave of refinancing appears to be finally cooling, however, as applications for refinancing loans are higher by "just" 38% from last year after a boom in April that saw applications rise by more than 200% from last year. 

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